S&P 500 Rise Most Since March as Tensions Ease on Ukraine

Aug. 8 (Bloomberg) -- U.S. stocks rose, with the Standard &
Poor’s 500 Index climbing the most in five months to erase a
weekly loss, as signs that tensions are easing in Ukraine
outweighed concern over crises in the Middle East.

Gap Inc. advanced 5.9 percent as the retailer’s earnings
and revenue topped estimates. Coach Inc. added 5.4 percent to
lead a rally in apparel companies. Zynga Inc. tumbled 1.4
percent after cutting its full-year outlook. News Corp. slid 1.6
percent after fourth-quarter earnings missed estimates as the
company struggled in its transition from print to digital.

The S&P 500 jumped 1.2 percent to 1,931.59 at 4 p.m. in New
York, the most since March 4. The Dow Jones Industrial Average
climbed 185.66 points, or 1.1 percent, to 16,553.93. About 5.6
billion shares changed hands on U.S. exchanges, 2.6 percent
below the three-month average.

“For the most part the market has been pretty resilient
over the last week or so,” Michael James, a Los Angeles-based
managing director of equity trading at Wedbush Securities Inc.,
said in an interview. “It has been able to shrug off a lot of
negatives and not go lower than it had.”

The S&P 500’s rally erased declines in the previous four
sessions and left the index 0.3 percent higher for the week. The
gauge yesterday came within 60 points of wiping out its gains
for 2014 as it closed below its 100-day moving average for the
first time since April. The Dow bounced back after touching its
average price in the past 200 days.

Ukraine De-Escalation

Stocks jumped after RIA Novosti reported that Russia seeks
a de-escalation of the conflict in Ukraine. Equities extended
gains as Interfax, citing Russia’s Defense Ministry, said
military exercises held since Aug. 4 near the Ukraine border are
over and forces are returning to areas of permanent deployment.

The S&P 500 had dropped 3.9 percent from a record on July
24 through yesterday as Russia amassed troops along Ukraine’s
border and as conflict escalated between Israel and Hamas.
Equity futures retreated early today as President Barack Obama
approved air strikes in Iraq, and rocket attacks marked the end
of a cease-fire between Israel and Hamas.

“When you see the geopolitical news in Russia and the
Middle East, it’s horrible from a humanitarian point of view for
U.S. equities, but how bad is it for U.S. economic
fundamentals?” Michael Purves, chief global strategist and head
of equity derivatives research at Weeden & Co. in Greenwich,
Connecticut, said in a phone interview. “It’s pretty distant.
We’ve had a big selloff since the highs in July and in my
estimations, this has been a pretty orderly retreat spurred by
overstretched market conditions.”

Excessive Declines

U.S. stocks climbed amid speculation that recent declines
had been excessive. Almost 80 percent of stocks in the S&P 500
closed yesterday below their average price of the past 50 days,
the most since 2012, according to data compiled by Bloomberg.
All but one of the 10 main industries in the index was oversold,
a report from Bespoke Investment Group LLC showed.

The S&P 500 has gone without a 10 percent correction since
2011. It trades at 17.5 times the reported earnings of its
companies, after reaching a four-year high of 18.3 in June.

Data today showed the productivity of U.S. workers rose
more than projected in the second quarter, rebounding from the
biggest drop in more than three decades and helping to restrain
labor costs.

Reports last week showed U.S. gross domestic product
expanded at a 4 percent annual pace in the second quarter,
confirming the Fed’s view that a first-quarter contraction was
transitory. Employers in the U.S. added more than 200,000 jobs
for a sixth straight month in July, the longest such period
since 1997.

Volatility Gauge

The Chicago Board Options Exchange Volatility Index, known
as the VIX, fell 5.3 percent to 15.77, extending a weekly
decline to 7.4 percent.

All 10 major industries in the S&P 500 advanced. Utilities
climbed 2 percent for the largest gain.

Consumer-discretionary shares added 1.6 percent, as Gap
rallied 5.9 percent, the most since November. The biggest
apparel-focused retailer in the U.S. reported preliminary
second-quarter earnings and revenue that beat estimates.

Monster Beverage Corp. advanced 6.7 percent after reporting
quarterly earnings of 81 cents a share. That beat the 75-cent
average estimate of analysts in a Bloomberg survey.

News Corp

Zynga dropped 1.4 percent after the online game company
posted second-quarter results at the low end of its forecast and
cut its full-year outlook after deciding to delay new games.

News Corp., which split from billionaire Rupert Murdoch’s
entertainment business last year, retreated 1.6 percent. Chief
Executive Officer Robert Thomson is working to transform the
company’s print properties into a digital business as well as
expand around the globe. The news division, which publishes the
Wall Street Journal and the New York Post, continued to face
difficulty at a time when advertising is fleeing print in favor
of digital destinations.